090118 Poultry Farmers On Edge; Production Cuts ExpectedJanuary 12, 2009
Athens Banner-Herald (GA) -- Americans eat more chicken than any other meat, but despite the popularity of their product, chicken producers have struggled over the past year and now are cutting back production.
That's bad news for growers in Northeast Georgia, the cradle of state's largest agricultural industry. Already losing money due to the rising cost of raising chickens, many poultry farmers are holding their breath, waiting to see if they will have any chickens to raise at the end of 2009.
"Put it this way," said Terry Stephenson, a Danielsville grower with seven chicken houses. "Have you ever seen the economy this bad? Well, I've never seen the chicken industry this way, either."
Farmers who own chicken houses get paid to house flocks of chickens for producers like Pilgrim's Pride or Harrison Poultry. The larger companies deliver chicks to their farms every two months or so and supply them with feed. The farmers keep the birds fed, clean and warm.
Chicken producers still are reeling from last summer's historic spike in corn prices - $7.50 a bushel, compared to just $2.50 in 2007 - combined with record prices for diesel fuel and changes in international trade, said John McKissick, director of the University of Georgia Center for Agribusiness and Economic Development.
At the same time, consumers stopped eating out as much - and demand for chicken fell, said Richard Lobb, spokesman the National Chicken Council. About 45 percent of the nation's chicken is sold in restaurants.
By the end of 2008 American poultry producers had their monthly production by about 10 percent in an effort to rebalance the market, Lobb said.
As high prices and low demand really began hurting the industry, Pilgrim's Pride - which has two processing plants in Athens and produces broilers at 378 farms in Northeast Georgia, filed for Chapter 11 bankruptcy after losing $1 billion over the course of the year.
Pilgrim's Pride, based in Pittsburg, Texas, was the largest chicken producer in the nation when 2008 began, but cut production throughout the year as it struggled to avoid bankruptcy, said Ray Atkinson, a company spokesman.
The company will end night-shift chicken production in Athens starting Feb. 9 - leaving between 80 and 90 people without jobs - and will cut ties with 10 percent of their poultry producers in Northeast Georgia.
The company will deliver the bad news to producers by Feb. 10, and the decisions on who to cut will be based on the farmer's past production, Atkinson said. About 45 northeast Georgia farms will lose their contracts, Atkinson said.
"It is difficult, and it's painful," he said. "We certainly understand that it affects people's livelihood, but it's for the longevity and to protect as many jobs and as many producers as we can."
But even producers who aren't growing for Pilgrim's Pride or those who are sure they aren't losing their contracts complain that the chicken business has gotten tough.
Chicken farmers started seeing their houses go vacant for longer periods between flock deliveries or started to see fewer chickens delivered in each flock early in 2008. Both changes decreased the number of birds raised on their farms each year, and fewer birds means less money.
Bogart chicken farming veteran Steve Crowe has been raising chickens for 30 years. He's five years from paying off the last of his seven chicken houses. A sharp increase in the amount he spends to heat his chicken houses over the last several years and the gradual decrease in the number of chickens he received in each flock has him worried.
"We're good right now," Crowe said. "But you worry what will happen in a few months if this thing doesn't turn around. ... If they cut an entire flock of birds, even though I'm this close (five years) from paying off my houses, I'd have restructure my loans. Then if they miss one flock, what's to keep them from cutting down to two, three a year."
In the last eight years, as new subdivisions pushed further and further in to the rural areas surrounding Athens, more and more chicken farmers felt pressure to sell off their land for development. This recent downturn is just going to put more pressure on some farmers to get out of the business, Crowe said.
But he and other long-time chicken farmers are in it for the long haul.
"Hopefully, by the end of spring we'll see this all settle out and the prices go back up," Stephenson said. "It's not the end of the industry. People are always going to be eating chicken." Originally published in the Athens Banner-Herald on Sunday, January 11, 2009